As a small business coach, I’m always interested when the conversations I’m having in my client strategy meetings are echoed in news from the Fortune 500. And we had one such example last week – ESPN’s transition of their on-air talent from specialists to generalists.

Many of my clients are professional services firms – they are selling their people’s skills and thinking. Several weeks ago, in a quarterly strategy meeting with a 40-person services firm, the leaders asked me what I thought about a shift they were considering to organize themselves in specialized teams that could create deep expertise in certain areas. Here’s what I said:

There is a lot of uncertainty in the market. That means that you don’t know what kind of work will come in, or when it will come in. (I am seeing this across my client base.)

As a result, you have to have flexibility in who you assign to different jobs, because your talent assignments are probably not going to work the way you plan them.

The only way you can have the flexibility you need to handle work in this uncertain environment is to actively develop cross-discipline agility – you have to make sure that people’s “downtime” is spent developing new skills.

In other words, you need to have a talent base that has a lot of flexibility in what and how it works – which is exactly why ESPN is making the shift they are, to multi-dimensional on-air talent.

Creating a flexible staff is no small task for small businesses. The large majority of small businesses under-develop their talent – that is to say, their talent development is mostly opportunistic and accidental assignments that happen to build new skills. That’s often OK – but it’s less likely to be OK these days, and companies who don’t get better at talent development are going to feel the pinch and pain of less-agile workers more and more, since the market will continue to be an uncertain place.

What’s needed to actively develop your people? How should they fill their downtime? Have your people…

Explore new areas by looking through trade publications or surfing industry web sites

Hold regular lunch-and-learns for your staff to educate each other

Shadow each other doing work that’s new to them

Sit in on internal or customer meetings that involve new areas for them

Are you developing the generalists your business needs – the ones with the skills and agility to navigate the uncertain environment we all face?

I’m going to be talking about dashboards on the Rising Leader webinar in March, and as I prep for that session, I’m reminded of why you should create a dashboard in the first place.

It may seem obvious on the surface, but a dashboard keeps visible and helps you track two things:

What in your business will “move the needle” for success

What you want to focus your attention on

Companies with fewer than about 25 people often don’t need a dashboard (which doesn’t mean they wouldn’t benefit from one). At that size, the team instinctively knows what’s important, and the leaders are close to the action.

Bigger than 25 people, though, and a dashboard is useful. Unfortunately, a dashboard is also harder at that size, for several reasons:

There are simply more parts of the business – more things that the company is doing, many of which seem important. What is really important to put on the dashboard?

There become several levels of “frames” that can be used to understand the business. There’s the tactical/trenches level (returning a customer’s email), the “strat-tactical” level (customer service), and the strategic level (the customer experience). Once you identify a part of your business that’s important, then you need to figure out if you measure it at the 100-, 1,000-, 10,000- level, or 50,000-foot level.

There often is no immediate, easy source of data for issues that are important. For example, most people would agree that employee engagement is important to most companies – but how do you measure that? [Note: there are some pretty simple ways.]

So, crafting an effective dashboard takes thought.

Many companies have an annual budgeting process – they recognize that coming up with financial plans is complex enough that they should spend time figuring it out.

Well, you should also have an annual “dashboarding” process that figures out what’s important to your business and what you want to focus your attention on. Some things will always be important; others will come and go.

If you’re a middle manager or a high-potential employee, you can join the Rising Leader Program and hear more about dashboards this month in our webinar. Visit phimation.com/start to find out more.

Sometimes I’m asked to help companies find the right path for their next 3-5 years – which qualifies as “long-term” strategy for a Stage 2 company. Other times, my strategy work focuses on short-term performance. In either case, it’s useful to have some way to measure progress and check to make sure we’re on the right track – to have a dashboard or scoreboard.

In designing a dashboard, there are 2 main factors: (1) what you will measure, and (2) how you will measure it. I would rather have a precise description of the business driver and an imprecise metric than an imprecise description of the business driver and a precise metric. In other words, it’s more important to understand what to measure than to have a top-quality measure itself – it’s not much help to have an accurate measure of something that doesn’t matter. Or, said even another way, you should not pick your metrics by what is easy to measure – you should focus on what will drive your business, and then do the best you can to approximate a metric if there isn’t one easily available.

As for the business drivers, when you’re measuring short-term performance, the first job is to decide what’s important to track – what’s going to move the needle. In general, the items to track to improve short-term performance are going to be either revenue or costs/productivity. However, I recommend you come up with more specific metrics that zero in on exactly how you’re going to drive those areas. Examples would be:

Revenues from our top 20 customers

Revenues from new customers

Revenues from a particular product line or market sector

Costs or productivity of non-customer-related activities

Costs or productivity in the areas of your largest expense areas

For a situation where the short-term performance is OK and the focus needs to be on medium- and long-term initiatives, there are a broader range of areas that are usually represented in a dashboard. Examples of long-term programs include:

Development of new products

Diversification into new markets

Building a new way to acquire customers

Changing the sales process

Training and developing your people in general, or the skills in a particular part of the business

Developing partnerships

So, what do you do if you don’t have a precise metric available? I’ve found that Green/Yellow/Red works fine as long as (a) there is a clear owner of the area that is being tracked, and (b) there is discussion about the status. The benefit of having an actual metric is that good data leaves little open to interpretation. (“Data ends discussions.”) If you’re not working with good data, but instead using something like a color scheme, then you’ll have to make sure you spend time understanding and interpreting what’s going on.

I’ll have some more specific recommendations for designing dashboards during my upcoming Monthly Strategy Hour – register to hear more and ask any questions you have.

Many of you reading this post are 10%ers. And there’s something in the back of your mind eating away at your conscience. You know there’s something not quite right about it, but you tell yourself that 10% has always served you well.

And you might be right. You’ve probably gotten along well enough with your 10%. Then again, you may feel like it no longer has the same effect that it used to. So let’s take a look at your 10% and see if it’s still serving you.

I’m inspired to write about 10% because I met with a guy last week who said, “It’s just what I’ve always done. I don’t really have a reason for it, and sometimes I wonder if it’s what I should be doing. But I’ve never known how else to do it.”

Later on, after our discussion, he said, “Yes, that’s what I want – that would help me, and it would help my team. They’ve always been a bit confused and defensive about the 10%.”

What am I talking about? Let me use his words, “We did a strategic plan back in 2008, but we’ve never updated it. It was helpful and we did some things because of it. But for the last 5 years, I’ve just said that we should grow by 10% next year. And that’s what I say at the start of each year. I kind of know that I could or should have more to my goal, but we’ve been OK just trying for that 10%.”

It’s something I’ve heard many times before. So, let’s look at the good, the bad, and the ugly of the “Let’s grow 10% next year” approach to strategic planning.

The good is that it’s an easy way to communicate that you want to grow, but not too much. It says, “Let’s get better at what we’re doing.” It’s also quick – most leaders who use 10% as a goal (I just can’t bring myself to call it a strategy!) need about 1 second to access their intuition and come up with that number. And it’s also good that most leaders who use 10% don’t enforce it – some years they’ll decline 1%, and others they’ll grow 20%, and both are received equally.

The bad is that 10% doesn’t tell anyone how to achieve 10% growth, and, since the person who used it likes a planning process that only takes 1 second, they usually won’t commit the time to strategy and planning to figure out how to get the 10%. And so, they just react to whatever the marketplace offers. That’s not good, but often times 10%ers are bailed out by a strong market, and so reacting is bad but OK.

Which brings us to the ugly, which arrives when a 10%er is managing a business in a market that is seeing substantial change. If that’s the situation, 10% is of no use, and in fact may be counter-productive. Because at the heart of 10% is “let’s change, but not more than we’re comfortable with.” And that can breed complacency that appears to be fine…until it’s too late for any small adjustments to work. And if the only goal you’ve ever had is 10% growth, you and your team are not going to be prepared when you need to lead your company outside your comfort zone.

So, if you’re a 10%er, you have a choice – to be passive or active. Either keep enjoying that comfortable feeling until you’re forced to do more…or lead your team to have a new set of discussions that develop your company’s ability to identify opportunities a little outside your comfort zone, go after them in smart ways, and stay ahead of the market.

Loch McCabe of Shepherd Advisors uses an interesting frame for thinking about your company’s health and growth. What would it take to double your revenues – and then double them again? Loch recently spent an hour with me describing his process for creating Exponential Growth, as he calls it.

Those kind of results aren’t easy to achieve, but there’s definitely a formula that works, and Loch is good at describing that formula. (And he’ll be sharing it during his upcoming workshops 10/22 in Ann Arbor and 10/24 in Saginaw.)

What stands out for me in Loch’s process is the focus on customers and markets. At the heart of Exponential Growth is customer-based strategy – using insights about your customers to identify the “leverage points” that will give you outsized returns for the investments you make.

From there, he goes beyond your current customers to look at emerging market trends. An important part of exponential success is being able to ride the right market waves, and Loch’s process highlights which ones to jump on.

Loch has asked me to talk about the organizational-development aspects of Exponential Growth during the workshops. So, when you get the strategy part right, what does it take from a leadership, teamwork, organization, and culture perspective to manage and execute that growth.

Let me give you a sneak peek of my thoughts here…

Organic Growth is more accommodating of cracks and stresses in your organization. Don’t have the right VP of Ops? Haven’t solidified your sales process? Don’t have a solid pipeline of talent? With Organic Growth, those issues are OK – they’ll need to be addressed, and will be over time, but they won’t create any serious risk.

Exponential Growth, on the other hand, forces and enables you to get your house in order. It magnifies the strengths and weaknesses of the organization. It offers a carrot and a stick for dealing with your issues – solve them and you see big results; avoid them and you’ll feel the pain.

Honestly, Exponential Growth is not for most people. It requires strong leadership, solid teamwork, effective operations, and a dynamic culture. Of course, that’s what most companies are aiming for – and struggling with. And that, I think, is the opportunity that an Exponential Growth vision offers. It’s like saying we’ll put a man on the moon – it’s a rallying vision to get people to break out of the patterns they have and address the issues that can linger and smolder for years and years if the goal is just Organic Growth.

What could a game plan for Exponential Growth do for your company? If you find it intriguing to think about, you should talk with Loch or attend one of the workshops to find out more – see the links above, or let me know you’re interested and I’ll connect you.

I like SWOT assessments (you know – strengths, weaknesses, opportunities, and threats) for getting people’s thinking out of the day-to-day and into a creative, strategic “space.” Unfortunately, I often see SWOT assessments that are just marginally useful.

Here are some tips on how to get more value out of your SWOTs.

If you can take a bullet and put it on someone else’s SWOT without changing it, then you’re not specific enough. One of the favorites to put under Strengths is “Our People”…which is also a good example of a bullet that is not specific enough to be useful in the planning process. What is it about your people? Their experience? Their deep knowledge? Their ability to be generalists? Once I know what’s special about your people, then I can create some possibilities about how to leverage that into a better advantage.

Work hard to look at the future. We live our lives in the day-to-day, so it’s hard to look ahead several years. And that’s why it’s an advantage to do – because most people don’t.

Put “the hard stuff” on the list. Every business has issues that it doesn’t like to talk about. The problem customer. The problem owner. The problem staffer. Without knowing the details, I can tell you that those issues consume a large amount of resources. So they need to be on your SWOT – though it will probably take some diplomatic phrasing. (For example: “Some customers are easier to work with than others,” “Owners are not always aligned on decisions,” and “Spotty follow-through.”)

Make sure you have bullets that cover the whole breadth of the areas you’re involved in. Often, leadership teams focus more on certain areas, and that bias comes through on the SWOT. But the non-focus areas are often the places where there is the most opportunity, especially for companies that are developing from the lean-and-mean start-up to a more complete and sustainable enterprise.

So, here’s the question to ask about your SWOT to see if you’re getting the value out of it: “Does it give us insight into where we should commit significant resources over the next 3 years to improve our chances of success?” If it gives you that, then you’re getting the value you should. If it doesn’t, then you should take steps to upgrade it – which I’ll cover in my next post.

My 11-year-old son started playing hockey goalie this year. At a recent goalie clinic, his coach said something I think applies to business leaders…

“Goalie is a hard position. It’s hard to be in your stance through the whole game, it’s hard to shuffle across the crease while you follow the puck, it’s hard to move out to challenge the shooter. But those are the right things to do – those are what will help you make the save. You can play the easy way, but you won’t be successful. So, I want you to remember a simple phrase to help guide you while you’re in practice and in games…If it’s easy, it’s wrong. If it’s hard, it’s right.”

Let me review some of the easy things that I see business leaders do:

Make important decisions before understanding the consequences

Make important decisions without involving the people who will carry them out

Focus on feel-good marketing activity rather than figuring out their marketing ROI

React to sales opportunities rather than focus on the ones that are best for their business

Hire someone that they like

Keep someone they shouldn’t have hired

Avoid the hard decisions during strategy meetings, so that the decisions are left for people in the field to deal with when they’re faced with a problem

Assume they know what their customers or markets want without asking them

Don’t question their own biases and blindspots

In every one of those situations, it’s hard to do the right thing. It would be nice if they weren’t hard, or if there was a magic wand that would make them easy. But that’s not how those situations work. And what happens if you handle them the easy way? Things take longer, you create more problems, you spend more money. In short, the easy way is actually not the easy way.

So, here’s the key message I want you to remember as a business leader: When you’re in a complex or important situation, the hard way is actually the easiest way in the long run, if you’re aiming for long-term business success.

I know it’s not easy, but please do the right thing. It’s what your company, customers, markets and communities need from you.

My sons love Legos. They love building the kits based on the instructions that come with them – and they love building their own creations out of a bin of parts that is the resting place of all those well-made sets.

When my son is building a triple-winged rocket, or an army base, it’s very clear that the creation process is not connected at all to the sales process. Yet, for some reason, when we are working on an innovation in our business, for some reason it’s much easier to think that the creative process is inherently connected to the commercialization process.

But it isn’t.

Being a business owner, I sometimes think as I watch my son and his Legos, “What would it take to make this little hobby a business?” My mind first goes to customers – their feedback, engagement, and money. And then it goes to logistics – managing the schedules, inventory, work flow.

You need creativity, customers, and control to commercialize innovations. The creativity part comes easily for Stage 2 companies – but if you don’t have customers and control, you’re just playing with Legos. Which, I can tell you from watching my sons, is engrossing and rewarding…but is not a sustainable business model.

I wrote several years ago about how growing companies need to manage their shifting need for innovation talent, referring to Ted Prince’s work with the Perth Leadership Institute. I’d like to highlight a few ideas about innovative people now.

First, Prince’s research indicates that relatively few people have the skills to be innovators, and someone can only learn to be more innovative if they have a high degree of “leadership agility,” as Prince calls it. So the first problem with hiring innovative people for a growing company is that there just aren’t many out there.

Second, the way innovation happens in Stage 2 means that more innovation doesn’t necessarily mean more innovators. Why? Because much of the innovation process is not about invention and creativity. There are other skills that are needed – sales and management skills being the two most prominent. Sales skills ensure that the company’s innovations are connecting with customers. Management skills ensure that the company keeps control of innovation projects. Sales and management skills enable your true innovators to do more of what they do best, so you will actually get more out of innovators even if their number stays the same.

So, for you Stage 2 leaders, the bad news is that it’ll get harder and harder to find truly innovative people for your growing business – and the good news is that you won’t need them as much as you might think.

I hear Stage 2 leaders all the time say, “Creativity and flexibility is what made us great – we cannot change that.” It’s a “pound the table” statement for most.

I agree – but my “pound the table” statement back is, “You’re right – but creativity and flexibility look different in a growing company than they do in a start-up company.”

And this is especially important – and hard for Stage 2 leaders – when it comes to innovation.

Most start-up leaders invent and innovate with customers that they know very well, and so there is a very short leap between the innovation process and customer feedback.

In Stage 2, though, companies usually have the resources to start pursuing their own ideas – not just react to what customers ask them for.

This change is far more challenging than most leaders realize.

First, Stage 2 leaders think that their experience with a few customers extrapolates to larger markets – which is true sometimes, but oftentimes isn’t. Second, Stage 2 leaders often involve customers less in the development process (they can be a pain, after all), which makes it less likely that the customer will want it, and more likely that the sales process will take longer. Third, a Second Stage company has enough moving parts that need to work together, that creativity without boundaries will cause more harm than good.

We’re not talking about too many controls here. A monthly review meeting. A customer meeting once a quarter. A paragraph of milestones and expectations that progress can be assessed with.